Βι¶ΉΤΌΕΔ

Was it a con?

Yes, is the straightforward answer.

Evan

Many thanks for your analysis of yesterday's budget. You mention that NI stops being paid by employees when the top rate of tax kicks in. Is this correct? I thought NI was uncapped but the rate at which you pay it was 1% above the upper earnings limit - or did Gordon Brown do away with this? Extremely unlikely I admit.

Of course it's a con. The 2p cut in income tax/removal of the 10p threshold is the most nakedly cynical piece of politics I have ever seen and seems to me to have been dreamt up solely to create positive front pages on the Mirror and the Sun who are stupid enough and supine enough to swallow it. In recent years, politicians have often publicly lamented the lack of public trust in politics but they can have no one to blame but themselves with stunts of this sort. This was just a giant act of spin. Pathetic stuff.

Gordon Brown has some 'previous' in the misleading statements area. There are numerous examples of announcing the same financial packages or new funds several times so they sound like new initiatives each time. We shouldn't wonder that the Treasury could not provide an example of a loser - they have been trying to ignore the majority of us for the past ten years. My reaction on hearing the 2p tax cut was 'where's the catch.' Interesting that the man himself didn't call it a tax cut but a 'tax reform' on the 5 Live Breakfast programme this morning. Raising expectations in this way could rebound on him later, when everyone finds they have been conned.

The problem is that the media are so quick to act on soundbites without first checking facts. All documents should be checked before being commented on, and as a journalist you should be expected to investigate before commenting. You played Gordons game and he won.

It's no more a con than any other political statement from the New Labour crew. However, they don't actually tell what the rest of us regard as the truth and they operate as a force of degradation in our society.

I feel that whilst we must expect our politician's to tell the truth, we mustn't behave as though they are truthful. The journalists who report political statements have a heavy repsonsibility on them to highlight very clearly, for example, that whilst the Chancellor may call this a "tax cutting budget", it is what the rest of us would call a "tax changing budget" and nothing else.

Somebody will gain from it but if I'm paying Β£200 on the first Β£2000 worth of taxable income rather than Β£100, I very much doubt it's going to be me.

How much of what GB said in his budget has to happen? By that I mean that a lot of the changes take place in the future. Can the next Chancellor come in and say I've decided not to give the Β£6 billion to the pension funds or to delay it by a couple of years etc? I know they might not last long living next to GB if they did, but what I am suggesting is that GB seems to be trying to tie the hands of any future Chancellor that he nominates.
Could there be a reason he mentioned that Gladstone was both PM and Chancellor at the same time?

I get annoyed by everyone saying Working credits will make up my wages. I don't qualify for working credits. I don't work quite enough hours, I'm not disabled, I don't have children.

So who's going to top up my wages now that my part of my wages which can be taxed has had it's rate doubled!

Nobody!

I co own and run a small business which employs a small number of non shareholding employees.

By my calculations (the accountant is still wading through detail), I will benefit by a few hundred pounds on personal taxation. However I will be able to draw less through dividends as the change to Marginal Rate Relief will reduce our post tax profit by a good number of thousands.

Overall not a good budget for the small businessman.

After 10 budgets shouldn't everyone be used to the way that Gordon plays his budget theatrics. You or Nick mentioned that he always mumbles or rushes through the bad stuff. We know from old that he always restates items that were announced months before, whether to pad out the speech or make it sound better is anyones guess. The current government have a history of announcing the same money over and over so it sounds like they are spending more than they really are. This was supposed to be the budget for 2007/2008 but with all the old news and the announcing of items for 2008, 2009, 2010 and 2011 it would appear that he is trying to lock his successor down before they have even got the job. He will do what Gladstone did and be premier and chancellor at the same time, just not officially.

Of course it is a con.

The newspapers report BASIC rate tax drops from 22% to 20%

The newspapers report 10% tax band is ABOLISHED

The truth is ...

10% tax band DOUBLED to 20%

I'm just incredibly disappointed that no politician has actually managed to work that out and use it in their soundbites

Gordon introduced the 10% tax-band with the "intention of widening this band for the benefit of the low-paid"

I'm impressed and disgusted at the same time, but having been working with politicians for the last 4 years I've realised that the only thing that is important to them is their image (and their pensions)

Oh dear me Evan - have you been duped? You really should have learned well before now that it's all smoke-and-mirrors with Brown. Might your respect for the man be colouring your judgement?

And by-the-way, Brown announced small company corporation tax rising from 20p to 22p. Yet you missed the fact that it doesn't. It rises from 19p to 22p. Minor detail.

Hi Evan

It was a trick. It seems everybody including myself initially focussed on the 2p cut to that highly emotive tax called income tax, and thought: Great! Well done Gordon! I'm going to better off! And, won't he be a great Prime Minister!

It was only when I then realised that the 10p rate was also being abolished that I realised that, as a middle income earner with no children, I'm actually going to be a lot worst off!

Chris

This is an excellent summary. Like most things with labour once you see through the spin the substance disappoints.

I think most contributers to the blogs and messageboards have realised that this is not a "tax-cutting" budget.

What worries me is the way it is reported in the labour-friendly media - e.g. The Sun, Mirror, and (dare I say it) the Βι¶ΉΤΌΕΔ.

These have so much influence on voters that many will only take the headline 2p tax cut from the budget and will not have the intelligence or the information to understand this is funded by other tax rises. Exactly how Gordon planned it!

Was it a con? Well, did he mention the removal of the 10p rate in his budget speech, or leave that for the small-print...doesn't that speak for itself?! Moreover, isn't the impact of this change to significantly hurt those people (particularly for those without children) on lower salaries? As many have already noted, this Budget was aimed primarily at one person - David Cameron.

Can I ask how the NI and tax package is a giveaway? Surely it depends upon the income level. If one earns enough to go through the basic rate band as it currently stands but not into the top rate band then it is not a giveaway as you will be paying extra NI to an amount slightly greater than the tax reduction.

Any benefits for the low paid surely only accrue to those who have children and can claim tax credits?

Classic Brown. I have lost count of the times he has announced new spending on something as though it were additional, only to find he had announced it previously several times.

Less a 'pretty regular sort of guy', more 'economical with the truth'?

In holding back such an important detail, GB confirmed what I've thought for some time - that he's dishonest and deceitful. He's of the same mould as Bliar; you just can't trust this corrupt, hopeless shower. The sooner GB and the rest of his hapless bunch are shown the door, the better.

The biggest "con" of all is calling this a "budget" in the first place. Many of the changes don't relate at all to the tax year 2007/8. They are either changes for future tax years going up to 2011! or else re-announcements of changes already announced. An annual budget should be restricted by parliament to the forthcoming tax year only. Also, many of the rises take effect this tax year, with reductions in future years. Brown has duplicitous written on his forehead.

Yes, it was most certainly a con. The biggest act of spin ever in a Budget speech by a Chancellor who apparently says he wants to move away from the PR emphasis of the current regime in Number 10.

One of Brown's virtues as future prime minister was supposed to be that he stood for a more straightforward approach, free from the web of spin which has entangled the Blair years. So it's tragic (for the country) that he's showing himself even more of a spinner than his predecessor - except perhaps less skilful. Announcing the 2p cut in the last moments of his speech fooled people for a few minutes. It will haunt him for years as an example of a childish attempt at deception. TimJ

Of course the Chancellor uses a lot of spin in the budget. At least he bothered announcing the most important measures this year, instead of slipping important changes through only in the Red Book, as in the past. That just makes it more important for journalists to do the uncovering for their readers and viewers, rather than uncritically broadcasting the government's propaganda.

Would it be so hard for you, Andrew, to come up with examples of losers under this budget on your own?

Here's a clue: single people living in London and so even moderately above the 40% band have lost out again and under from this Chancellor.

Pressure of time is no excuse: you could easily think up these templates in advance and run them through the figures.

So, can we rely on you for a rigorous analysis?

But it would be much easier for those of us covering Budgets if we didn't have to spend so much uncovering them first.

It sounds like it's too much trouble.

Was it a con? No.

Were the commentators wrong-footed. Well, yes they were. But they ought not to have been.

Any commentator on the tax system or the economy ought to know by now that it is essential to look at the small print of a Brown budget.

The most interesting thing for me about the changes announced yesterday is the proposal to move the small companies corporation tax rate above the basic rate of income tax. This will be unpopular with small business pressure groups, and quite understandably so. A more sensible approach would have been charge small companies 20%, the same rate as basic rate tax from 2008/09.

Yes, but by 2009 we will have a Tory government and Brown will be yesterday's chip wrappers.

Evan - glad to see you've woken up. All is forgiven - but plenty of bloggers managed to pick up on the smoke and mirrors rather sharpish!

I lose out by the Βι¶ΉΤΌΕΔ's calculations. Plus switching to a limited company is something that I probably can't afford to do now.

Very bad budget for me. Good for my rich city friends.

The main point however, is that most of the rises are occurring after next year's budget, when things will probably change again anyway. It's a total sham.

The question should be different. Not whether the budget was a con - which as Evan Davis admits - it was. The question to ask should be "Was the budget reporting a demonstration of Βι¶ΉΤΌΕΔ bias?" Even when website articles, radio reporting and TV reporting reported the doubling of the starter rate, it was relegated to small text or mentions in passing. Without exception, the Βι¶ΉΤΌΕΔ headlined throughout it's coverage the "2p cut". If the Βι¶ΉΤΌΕΔ had met it's charter requirement of balanced reporting both should have been given equal weight - especially as the 10p increase in the starter rate has paid for the reduction in the basic rate. If the headlines were due to laziness on the part of the Βι¶ΉΤΌΕΔ reporters, then incompetence could be an explanation of this demonstrated bias. However, it is unlikely that the entire news staff are lazy or incompetent, leaving the worrying implication that there may well be political bias in the Βι¶ΉΤΌΕΔ "news" reporting.

I agree; a less than honest presentation. Which doesn't bode well for the man who would be Prime Minister.

A typical Budget - in one way or another we always have to pay for what we spend. But for this Chancellor to make such a 'grand statement' at the end of his speech that he will be reducing the basic rate of income tax by 2p in the Β£ WITHOUT mentioning that he was also withdrawing the rate of 10% on the first Β£2,000 of income was, to my mind, despicable. Does he think he is dealing with a population with no intelligence and that we don't realise straightaway that, with the extra Β£200 tax to be paid on the first Β£2,000 of taxable income, it will require a further Β£10,000 of income before any benefit will be gained.

Why is Gordon Brown being allowed to get away with his misleading statements and downright lies about Tax Credits? The facts are that many low paid people do not qualify for them because of their age, they don't have children or they work insufficient hours. Believe me, contrary to the spin a lot of hard working people will suffer as a result of removing the 10% tax band. My obsevation is that when Government politicians, including Brown, have been questioned on this they have been allowed to give false answers and get away with them because TV journalists do not understand the rules or are frightened of upsetting the bigwigs. In either case they are not being professional and are letting the public down.

Evan,

Thank you for your blog. Much is made of Brown's skill as Chancellor, but we should never forget the huge damage he wrought on pensions by his Β£5 billion a year tax raid.

If one assumed for the moment that he is correct and that on average families will be Β£100 a year better off under this budget, they will still be Β£1,200 a year worse off than they were in 1997.

I understand that the Chancellor is an admirer of Adam Smith. The institute that bears his name says that Tax Freedom Day is now 1st June. In 1997 it was 27th May.

Tax cutting Chancellor...my eye!

Was it only me, or were others bothered when Brown claimed early in the speech that inflation in the UK is lower than in the US using "the same measure of inflation". Granted, they call it CPI in the US too, but even though it has the same name, it is by no means the same measure. CPI in the US is weighted by about 25% on housing costs, whereas CPI in Britain excludes most housing costs. If you used the same measure with the same weighting in the UK, British inflation would be sky-rocketing at the moment, well above US CPI.

A point that has not been touched yet is that the car tax rise for cars with high emissions will mostly hurt big famiilies with 7-seater petrol vehicles. As far as I'm aware there is no green alternative to these cars and Mr. Brown should know it. On other other hand the Ferrari & 4x4 owners has enough wealth to cope with higher tax. So who loses? ... the poorer ... AGAIN!

Hello Evan,
Enjoy your blogs and presentations on Βι¶ΉΤΌΕΔ especailly as I am in UK for half the time and in HK for the remainder.
Whilst this whole issue of being responsible for 10% at low levels of income and then abolishing ones own innovation - with/without explanation - could it be possible that by reducing top rate Brown is leaving his successor the flexibilty to increase back to 40% to cover his own debts ?
Best wishes
Dave Sanders

I am a 60 year old female with a reduced state pension because I was not told 40 years ago that paying the reduced Married Womans NI contribution would affect my retirement pension.

I also have a private pension of less than Β£3K pa.

I drink a couple of glasses of wine a week and drive a small car - we don't have good public transport here in countryside - something overlooked by London based polititians.

I have just calculated that I shall be worse off after this budget mainly because of the removal of the 10p tax band and because the mitigating increase of allowance does not come into operation until age 65.

This Chancellor has shown no consideration for people on low incomes or pensioners like myself.

Brown may have reduced the Basic Rate of Tax in theory but in fact his changes will result in many thousands of low earning people being far worse off than at present.

Labour - a party for the people? NEVER. I just hope voters remember Gordon Brown and his stealth taxes when the next general election comes around.

The fact that "abolishing" the 10% band while lowering the 22% band will cause a tax rise for millions of low paid single people was immediately obvious to pretty well everyone capable of basic maths. More income tax for those on less than Β£17k and less for those above is scandalous and contrary to every thing the Labour party supposedly stands for.

Social Democracy? What Social Democracy?

I find it a little embarrasing that the media were so slow to latch onto this; similarly it's worrying that the opposition didn't spot it straight away. In fact, the only person in the spotlight who seemed to be on the ball was Ming Campbell.

As a pretty ordinary guy who struggles to fully understand the Budget and its implications (I suspect I'm representative of much of the population on that score) what I find most offensive about Brown is his sheer arrogance, smugness and dislocation from ordinary life. On numerous previous occasions his 'economy with the truth' (what in other people would be called lies) has been highlighted by commentators so that people like me can see what Brown is up to. Yet in spite of that he continues to treat us all like idiots. The way he and Blair congratulated each other with broad grins at the 2p off income tax two finger salute to the Tories was an insult to the people of this country. Brown is only interested in power (and with quite breathtaking arrogance he told us that he would be next prime minister) and the narrow, bickering, childish little world of Westminster than the oridinary people of this country. It's high time politicians, and Brown in particular, realised that many people find them thoroughly unpleasant specimens.

Well if you excluded the green tax increases and the drinking/smoking taxes I'm sure that people would be gaining a little.

TAX DOUBLES WITH 2p OFF

A single man aged 60, retired early on a works pension of Β£7185 will pay Β£196 tax in 2007/2008. When the 10% rate is abolished, he will pay approx. Β£390

How can this not be a con?

Of course it's a con. My husband and I do not have any school age children, run our own small business, and do not qualify for tax credits. We are going to be thousands of pounds worse off with this budget, especially with the small business tax being increased from 19% to 22%, and the abolition of the 10% starting rate personal tax. Is he trying to turn the UK into a communist society, whereby we all get paid for doing nothing, rather than rewarding enterprise? There is no way we can afford to take on another member of staff now as planned; so he's not only stolen money from us but also kept someone else out of a job.

The only people who really benefit from this budget, as usual, are single parents (widows/widowers and divorcees are not included in this gripe). Not only has their tax credits and child benefit gone up, but if they have children aged 16 - 18, their kids will also get 35 pounds per week for staying on at school.

The budget was a con trick,it was spin,it was smoke and mirrors.All intended to confuse through complication.One is only better off if one is able to claim under means testing.Yet many who are entitled to claim find the forms to difficult.Means tests here means tests there means tests everywhere,typical of Gordon Brown Obfuscating.Typical of a government finding itself with its policies collapsing (NHS,Prison Service,Immigration,Passports, Integrated Transport etc.)Hide the truth with smoke and mirrors see ""Yes Minister"I rest my case.One complicates at ones peril.

I feel let down over the lack of news coverage on Eddie Georges statement that the debt funded housing bubble was engineered by the elite to hold back a recession earlier in the decade.....

The con is the budget coverage (wow like we are going to be better off anyway) has been an opportunity for the Βι¶ΉΤΌΕΔ and some other media to shy away from attempting positive spin on the subject..... We dont want to hear the concrete 'supply Vs demand pushing up prices theory' blown out of the water do we ?????

Funny that..... Now the august 05 rate cut seems to make more sense...

So Evan, Would you please start a blog on the Βι¶ΉΤΌΕΔ site to get some views on this dynamite story ?

The Budget is never easy to understand. and it certainly takes a while before anyone can figure out if they're better or worse off. But as long as the total expenditure HM Treasury increases, chances are it's a bad budget. Last year, HM Treasury raked in Β£524 billion, this year it's projected to be Β£610 billion. Given that just Β£ 1 million pounds would be a life-changing for most of us, I think it's unbelievable that the UK needs this amount of money to run. Come on people, THINK !!! Β£610,000,000,000 & the NHS still ran out of money? Where is the money going?

There's so much made about this Budget tha we forget the reversals this signifies and the fact that we are none the wiser re PFI impacts.

If we are rightly uncomfortable about the effects of this Budget, just wait untl we find out the ture cost of PFI that Brown has championed and remained off the books to make Brown look prudent while increasing very expensive investment want an exampke check out the STEPS deal (Google it)

Whether or not it is a con is rather beside the point in my view. All Brown has done is try to put the best spin he can on his budget, and what politician wouldn't?
The important point is whether he has improved the tax system by his measures: some people and companies have gained and some lost out, but in both corporation tax and income tax he seems to have simplified the system a little bit. In that respect, his budget must have improved matters and in the long term this should be beneficial to the economy.

Thanks for the half-hearted apology, but it was really, REALLY shoddy work from you guys yesterday. No other way to put it. Saying the rich were paying for the tax cut was utter nonsense. And using the excuse of "But it would be much easier for those of us covering Budgets if we didn't have to spend so much uncovering them first" doesn't wash - all I had to do was look at the headline page to work out the poorest were subsidising the middle-earners. You had me thinking I was going mad with the way you and your colllegues stoically ignored what was right in front of you and what all the blog commenters were saying. What was really warranted was a "sorry, we got it wrong" headline blog post.

My respect for "experts" diminishes every day.

This budget is no more than "shuffling the deckchairs on the titanic" a great deal of wasted effort. The key point is that GB has no money to spare because he has increased public sector employment by 800k and increased the number of people dependent on the state to 7m? Cutting Government income could only mean in cutting public sector employment or reducing benefits and tax credits which would affect voters.

The increase in car tax has convinced me that the Government is not serious about reducing CO2 emissions. The tax should be place on fuel as the miles driven produces the CO2. Many people own classic cars and modern sports cars but only drive them infrequently, which amount to very low mileage annually and limited emissions. Increased tax on fuel would reduce overall annual mileage correspondingly reducing road congestion and more effectively limiting CO2 emissions. The Governments approach is simply going to invite drivers not to tax their vehicles at all. There has been little consideration to the retired who may only drive a high emissions car to the shop twice a week but will be penalized heavily for doing so. Finally, in summing up, it’s not the grams per km that matters, it’s the whole carbon footprint of the vehicles complete life cycle that should be considered. When the overall CO2 life cycle is considered hybrids are not so green afterall.

Another stunning budget by Brown. Announcing cuts & increases years before they are implemented so you can roll them out whenever things are getting a bit sticky.
The inheritance tax threshold will rise over the next 3 years (but not before millions of ££s are raked off and squandered, paid for by people who were never supposed to pay inheritance tax)
The terrible reporting by the tabloids and also by Βι¶ΉΤΌΕΔ radio stunned me with the 2p tax cut headlines with no mention of the lower rate being doubled. I believe many members of the public who get their news from these popular sources will think they are going to be better off. With Brown you always have to read the small print!
My wife & i have no kids both have full time jobs are both below the 40% tax threshold so we will probably be a little better off in takehome pay, we have never claimed benefits, tax credits, childcare vouchers etc and have worked all our lives, where is the incentive for us to keep propping up this wasteful goverment?

My Comment is
Is the budget a spending plan devoid of any long term desire to change society.

For example the 10p tax for the low earners was as much a subsidy as the benefits now being paid - but presented as a two step process we have a tax and spend government and it is just accepted.

was the long term intention to go from 10pc, to 40p with benefits - voila - high tax - high spend.

Am I the only person who has thought of this - does David Cameron need me to point everything out to him???!!!

It's not a con - it's politics surely?

As for hiding a few facts in the small print - that happens in every business surely?

I'm little surprised everyone is so surprised!

I'm widowed, 53, no children, with a small personal pension income. I'm currently ill so I don't work. My income tax is set to increase by approx Β£130. I have never witnessed such a cruel and cynical budget, designed to undermine the opposition at the expense of people that Brown expected (correctly) the Press wouldn't notice. And you, the press, failed to see what was under your noses. Shame!

I would love to see a breakdown of McBrowns tax measures over the last 10 years showing who has benefitted and who has lost out based on our positions 10 years ago. Of course inflation would need to be factored in.
I m guessing that the result would actually be rather shocking.

Smoker vs. Non-Smoker

A typical male smoker starts at 15 years old, smokes an average of twelve cigarettes a day for 60 years and then dies.

In that time the habit costs a total of Β£65,700.00 of which Β£52,560.00 is paid to the government in taxes.

For those taxes (and others) paid in his lifetime the smoker receives 10 years of state pension worth about Β£45,396.00. So the Government makes a profit.*

On the other hand, the typical non-smoker lives 10 years longer, does not pay the tobacco-related taxes and receives 20 years of state pension worth Β£90,792.00. In addition, the non-smoker at 75 has Β£65,700.00 of savings the smoker does not. So the Government makes a loss.*

And this maths, ladies and gentlemen, is why the government is wildly searching for new and greater taxes (viz road pricing). As the population gives up smoking revenue goes down and pension costs go up.

However, it has to be said, if the smoker happens to live longer the discrepancy narrows because care for the elderly will be paid for by the government for someone without savings whilst the non-smoker will be required to surrender all of his savings to pay for his care before the government pays.

* These figures are in 2007 values which avoids the necessity to compound and inflation-adjust and is the methodology frequently used by economists

The Chancellor stated that he only targeted the eastern europeans who avoid paying tax hence the rise on small business tax however there is also another loophole, a lot of eastern european nationals avoid paying road tax on their cars by not registering with the DVLA i telephoned to find if a neighbour of mine who had been living in the area since 2005 has registered his car and i was told this was not the case i was told to contact the police which i did. The police stated that if the car is used for criminal activities then they would act, without that they cannot do anything. The person is using the roads without paying tax, and also claiming child support from the council. Maybe the Chancellor can raise more revenue by clamping down on the eastern europeans who use their vehicles without paying the road tax

Didn't Brown mention that he was getting rid of the 10% band in the budget speech? If people didn't understand what that 10% band means, then they obviously don't care enough about their finances. It's not as if it's complicated tax law! Most people have internet access, or phone numbers for their council to find this information out. But then, what should we expect from a nation in so much debt.

the sheer arrogance of brown and his
sidekick mr Ed is unbelievable ,they have been caught with their sticky fingers in the till and what do they say ?, no not us we were told to change the tax on pensions by ,cant quite remember who told us ,CBI ,civil servants well somebody.
these two idiots have wrecked the pensions of millions of people and of future generations, while they sit back looking forward to gold plated index linked money pots supplied by us , a lot of people will be living in misery having to rely on benefits to get by

This must surely end tv-media practice of reporting "immediate", "on the spot" "instant analysis" news. I don't want it if it means distorted, incorrect and skewed reporting. I think the beeb is one of a number of organisations who owe us an apology. As for Gordon, the man is inhuman in his appetite for others' misery. He must be stopped.
Vote Tory, vote early, vote often!

This is a pretty much neutral budget, without big shifts either way. The chancellor giving the speech has the best economic record of any of his predecessors in terms of interest rates, employment, inflation, and economic growth.
And yet nobody has a good word to say about Gordon Brown. Why is everyone so angry? Can't they remember 3 million unemployed, negative equity, Black Wednesday, 15% interest rates?
Well, obviously not. It just shows how futile it is to try and help the poor while keeping middle England happy. There is no limit to middle England's appetite, and no tax the middle classes of this country are happy to pay. A low tax, shabby, divided Britain is what they want, and that is what they'll get.

Was it con? Gordon the tAXman will never give money to the income generators in this country. It is mine to earn and his to spend.

OF COURSE IT WAS A CON

Everyone knows it was a con but knowone says so? WHY,cos the country has no backbone, if I had stolen all the pensioners money I would be in prison. Where are all these polititions living, Ibet there not on the streets, no I am and I'm still paying for there posh,upperclass homes, WHY SHOULD I? Get some backbone cos the country is collapsing, Who won WW2, certainly don't look like us does it. Maybe Adolf was right.